Brewery Law

We are ready to announce that our team of counsel will be joining forces with the firm of Miller Nash Graham & Dunn, LLP (MNG&D). Our alliance provides the clients of Reiser Legal with affordable access to the Northwest’s most fully-equipped beverage law practice.

This combination of resources ensures that our clients don’t have to go out-of-house to seek additional legal services. This means that you will now have access to first-rate assistance in many additional areas, including securities regulation, employment relations, tax, real estate financing and leasing, import/export, and the full range of federal and state litigation.

As craft-oriented legal counsel, we have developed close relationships with each of our clients. The Reiser Legal team talked with many firms in an effort to find the best marriage of craft beverage ideals and high-quality legal services. We found those traits in Paul Havel, head of the craft beverage law division at MNG&D – and we can’t wait to introduce Paul and his team of experienced beverage attorneys.

If you are interested in working with our team, please email us or call us at 503.205.2596. We hope you are as excited as we about this new alliance!

Often trademark coexistence agreements include a consent agreement (the picture is an excerpt from one), whereby the parties consent to one another’s registrations. The USPTO, however, does not have to accept such agreements.

When trademark disputes pop up, often breweries agree to get along. In doing so, two beverage businesses can seek what’s called a trademark coexistence agreement. This is an agreement that essentially sets forth trademark restrictions on both brands, as the businesses mutually form a plan to distinguish themselves in the marketplace. A trademark coexistence agreement might, for example, provide that one business will only use the trademark in the name of its brewery. In turn, the other brewery may agree to only use the trademark as a single beer name. These agreements can be between two breweries, or they might be between businesses in different product categories. For example, a trademark coexistence agreement may be between an energy drink company and a brewery, a distillery and a winery, and so on.

One boon of a trademark coexistence agreement is that it settles the matter between the parties, giving each confidence in moving forward using its brand. Another boon, however, is that a trademark coexistence agremeent may help both brands obtain a federal trademark registration.

Imagine this common scenario.

Brewery A applies for a trademark, we’ll make up a mark and say the mark is GREEN PARADE.

Brewery A receives a trademark office action response. The response is an Office Action stating a Section 2(d) refusal to register the mark. The reasoning behind the Office Action is that another brewery, Brewery B, has a registration for, say, “BLUE PARADER BREWING CO.” The trademark examiner cautiously sees the closeness between GREEN PARADE and BLUE PARADER BREWING CO., and sees that both are on beer. The examiner believes there is a likelihood of confusion. Brewery A then has six months to respond to the Office Action and urge why confusion is not likely, else Brewery A may not be able to obtain its federal trademark.

Notably, though, he United States Trademark Office may refuse a trademark application when the two parties themselves don’t necessarily see a problem. For example, Brewery B called BLUE PARADER BREWING CO. may have no problem with Brewery A’s use of GREEN PARADE. Perhaps GREEN PARADE is the name of Brewery A’s IPA, and that’s it.

In this instance, Brewery A and Brewery B could hammer out an agreement between them that sets forth a plan to coexist in the marketplace. This is a trademark coexistence agreement. Typically, the document contains an ancillary agreement called a trademark consent agreement. The purpose of the trademark consent agreement is to concisely set forth the main terms of the coexistence agreement, in a way aimed toward presentation to the USPTO trademark examining attorney.

The trademark examining attorney can use the consent agreement as evidence there is not a likelihood of confusion. After all, if the mark owner itself does not see a problem, it makes sense to defer to that mark owner’s judgment.

That said, the trademark examining attorney is not bound to accept the consent agreement. Sometimes, if the marks are just too close, even if the breweries agree, both may not be able to obtain a federal trademark registration. Of note, there was a recent matter where two breweries agreed to coexist. One brewery had TIME TRAVELER BLONDE, and the other brewery had just TIME TRAVELER. Despite a coexistence agreement and a consent agreement, the examining attorney believed the marks were nevertheless too similar. There was an appeal, and the Trademark Trial and Appeal Board agreed with the trademark examining attorney.

Going from vision to lights on and taps open can’t be done overnight, but this brewery startup timeline gives you a good estimate of the timeline from idea to frothy fruition. (Pictured? That’s Burial Beer Co., the vision of Doug Reiser of Reiser Legal, a craft brewery located over in Asheville, NC. Stop by and say hi to Doug sometime.)

How long does it take to open a brewery? I’ve put together resources as a part of our Brewery Startup Series in the past. I thought it was time to revisit the milestones we’ve provided, putting the brewery startup process into a helpful timeline for those thinking about getting started. This is a sketch of what it looks like for most emerging alcoholic beverage businesses, getting at how long it takes to open a brewery:

8+ months out:
-Business Planning: Put together a business plan, consider whether investors are needed. If so, you may need to add to the timeline, to compliantly raise funds and bring those investors onboard.

7-8 months out:
-Business Setup: Form your entity, obtain an Employer Identification Number, Open a Business Bank Account, Fund the Account. This comes first.
-Get an Operating Agreement together that guides decision making, transfers of interests, and sets forth the business and management structure.
-Take steps to clear your brewery name.
-As soon as the entity comes together, file for protection for your selected and cleared brewery name. (Can do this up to 3 years or so before you open, but best to wait until the entity is in place.)

5-6 months out:
-Begin seeking out space, negotiate a lease.
-Once a lease is in place, kick off federal licensing as much as is possible.
-Order equipment.

1-2 months out:
-Tee up the state licensing process as much as possible so that when federal comes in, you’ll be ready to submit.
-Obtain federal approval and submit to state.
-Submit label approvals to TTB or the state, if required.
-Clear and protect all important brand material, such as the brewery logo and flagship beer names.

There are many sub-steps of course, and the scope of the project and commitments of the founders may affect the timeline a good bit, but those are the big milestones. If you have a good idea of your team, a handle on brewing, and a vision of what you want to do, this is a realistic look at how it works for many brewery startups. We’re here to help for those who have questions or are looking to fill in the gaps.

When does your carefully crafted brew require a TTB formula approval? It’s not as straightforward as you might hope. Read on for important background on TTB formula approval requirements.

Government authorities are great at drawing confusing lines. One example is understanding what beers need a TTB formula approval. (Note that TTB, or the Alcohol and Tobacco Tax and Trade Bureau, is the primary federal regulatory authority over alcoholic beverages and producers.) Before getting to the question of which beers require TTB formula approvals, it helps to cover some background material, and the necessary rigmarole it takes to get one. What are they, what beers need them, when do you apply, how long does it take? Read on and we’ll roll through it.

What is a TTB formula approval?

When brewing certain kinds of beer with certain ingredients and processes, TTB requires that the agency first approve your formula (your recipe / process essentially) before it will consider your beer for a Certificate of Label Approval (COLA). That process is commonly referred to as a TTB formula approval. This is required for a range of beers, as we’ll cover soon.

When do I seek TTB formula approval?

The time to seek formula approval is when you’re planning to package and distribute a product across state lines. That’s when you’d need to get something else, called a Certificate of Label Approval (which authorizes you to move that beer across state lines). The formula approval is a prerequisite to the COLA for beers that need it. Here’s another scenario that’s important to know. If your state requires a COLA before packaging and selling your product even within the state, then you’ll need to go through the formula-approval process first. (Submitting your TTB COLA label approvals is technically required by the Washington State Liquor Control Board, for example, so you’d need your (1) TTB formula approval and then (2) TTB COLA label approval, before you have authority to sell packaged product in the state).

How long does it take to get a TTB formula approval?

TTB does a great job, but it’s not as fast as getting your COLA. You can view average TTB formula approval processing times at this website. At the time of writing, it’s taking TTB about 53 days (so almost two months) to issues its formula approvals. In part, TTB’s backlog is due to the increase in number of producers and, thereby, the beers hitting the market and crossing state lines. Sneak preview, though…Based on statements from TTB correspondents at the Craft Brewers Conference this year, they’d like to see the number of required formula approvals go down, and may be easing requirements even more, letting more beers through the gate without requiring approvals first. We’ll touch on that in a second. In any event, you will want to budget this time when planning to release any beer to market that requires a formula approval. And then you’ll want to keep in mind that, after the formula approval, it’s going to take some time to get your COLA as well. (Current TTB COLA approval wait times here. Battle Martin does a fantastic job getting through these. Yes, it’s one guy at TTB who does every beer label, and he’s refreshingly also most awesome to hear speak and to deal with.)

Which beers require a TTB formula approval?

Well, let’s be glad not all of them do. But, the line drawing here doesn’t make the most sense. TTB requires formula approval for any beer that is made using nontraditional processes. If you’re brewing up a traditional recipe, this doesn’t need to be on your radar. Water, malt, hops, and yeast? No worries. It does, however, come into play when you start using adjuncts or creative processes.

As a general rule, the kinds of beer recipes listed below require a TTB formula approval. However, there are very important exceptions to this rule which I’ll cover below.

To which flavors or other nonbeverage ingredients (other than hops extract) containing alcohol will be added;
To which coloring or natural or artificial flavors will be added;
To which fruit, fruit juice, fruit concentrate, herbs, spices, honey, maple syrup, or other food materials will be added; or
That is designated as saké, including flavored saké and sparkling saké.

Which beers are exempt from the general TTB formula approval rule?

Here’s a list of the exempt ingredients below (thanks to a ruling in 2014 relaxing the standards). This list came from urging by the Brewers Association, wanting to relax the onerous approval requirements for beer ingredients and processes that really were traditional. As you peruse the list, you’ll see that certain fruit additions are okay…but not others, at least right now. For example, coconut doesn’t make the cut. So if you’re using coconut in any beer, you need a TTB formula approval. Moreover, a multitude of spices got the green light, but if you’re using something creative like lemongrass in your wheat, it’s not going to pass muster. Last, and fortunately, ingredients like brown sugar, chocolate, coffee beans and grounds, honey, lactose, maple syrup, and the like are all okay. But, notably, if you’re brewing a batch of coffee and then using that brewed coffee in your beer process, that is not okay. Just the beans or grounds. Hmm.

The below processes are also exempt. As you review the list, keep in mind that you can use woodchips (remember, though, you can’t say it’s a barrel-aged beer then or say on its label that it has barrel flavor, that gets to labeling issues), but you can’t soak those woodchips in alcohol.

Aging beer in plain barrels or with plain woodchips, spirals or staves made of any type of wood.

Aging beer in barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits.

Aging beer with woodchips, spirals or staves derived from barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits, or with woodchips, containing no discernible quantity of wine or distilled spirits, that were previously used in the aging of wine or distilled spirits.

In Conclusion, TTB Formula Approval: Moving Forward

Ultimately, based on comments from TTB authorities who attended the 2015 Craft Brewers Conference in Portland, TTB seems to be revisiting further ingredients / processes to include on the list. We’re hoping coconut and a multitude of other now-traditional ingredients make the cut. We’ll include them in a post whenever we get word. But, for now, as you make plans to expand into other territories, keep in mind that the COLA isn’t the first step for many of your creative beers. Instead, it’s TTB formula approval, then the important step of TTB COLA approval. Forgetting this, or doing them out of order, can add significant delays to your beer’s release time. If you have questions or concerns about your upcoming COLA or TTB formula approval needs, Doug and I can help, no matter where in the U.S. your brewery is located. Feel free to send us a note.

Will we see brewery tax reform in 2015? I hope so, no matter which bill ends up making it through the gauntlet.

I want to point you to excellent reporting by Chris Drosner (aka the Beer Baron) over at the Wisconsin State Journal on the potential impact of the two competing beer tax bills. Check out his article here. We covered the Beer Institute’s Fair BEER Act and the Brewers Association’s Small BREW Act last week here, and through insightful discussion with Chris, edited it to correct and improve our coverage. Good stuff, and glad the Brewery Law Blog can help create a dialogue on these important topics, which is what Doug envisioned when launching five years ago. Most importantly for this story, Chris helps tell the part that keeps getting lost in other coverage; the Fair BEER Act is not just beneficial for “big beer.” Of course, that act would cause the biggest cuts to the federal revenue, but may also position the majority of today’s brewers for the most explosive growth. Check out Chris’s article for more details on that. What do you think?

Note: I should disclose, I’m a member of the Brewers Association. However, as a member and given my position as a small-brewery lawyer, I’m interested in what’s best for craft breweries but also the beer industry at large. At times, the line drawing between “us” and “them” and “our growth” vs. “their growth” can seem less important, and this tax scenario might be a case where everyone could come together and agree that more jobs and growth in the entire beer industry is a good thing. After all, consumers still seem to be cheering for the little guys, even when they’re not so little anymore. I doubt that tax cuts and attendant growth across the board will dupe craft consumers and change their David-leaning preferences. Even if big beer exposes more would-be craft beer lovers to the product through their efforts to become more relevant, I think that, just like all of us did, we’d eventually still see those consumers start coming out to their local taprooms, plugging into the truly craft beer scene, and evangelizing the awesome awesome stuff microbreweries are making today. That excites me more than line drawing on these tax issues here. Either way, passage of some measure of brewery tax reform would be a wonderful thing, and a huge accomplishment for the industry.

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Have a Beer Law Question?

We have now joined the law firm of Miller Nash Graham & Dunn! Contact us for a free initial consultation with a licensed attorney experienced in beer law. We can review the legal issues your brewery faces, with no cost or obligation. Reach us via telephone at 503.205.2596 via email at info@brewerylaw.com.

We assist breweries nationwide with federal trademark and TTB needs, and provide full beer law legal services to breweries in several states. If your matter requires legal counsel in a different state, let us refer you to another trusted beer attorney who can help.

Disclaimer

This website and its content is made available by Reiser Legal for educational purposes only, to provide general information on brewery law and not to provide legal advice. If you use this website you understand that there is no attorney-client relationship between you and Reiser Legal and that you should not use this blog as a substitute for competent legal advice from a licensed professional attorney in your state.